World Grain - July 2011 - 38

FEATURE: KEEPING A CLOSE EYE ON CORN

higher, with lower U.S. production being offset by a 25.9-million-tonne growth in other parts of the world, according to the June USDA report. Wheat reserved for food use is projected at 945 million bushels, up from 15 million in 2010-11, while wheat for feed and residual use is estimated to grow to 220 million bushels, up 50 million from the previous year. Steve Freed, vice-president of Research for ADM Investor Services, Inc., provided an overview of the world wheat situation at the purchasing seminar. He said, assuming there are no further signiﬁcant weather events in the world’s major wheat growing regions, prices may trend lower toward the end of the year based in part on the decision by Russia to resume exporting wheat and the potential for export demand to decline slightly from a year ago. “The key is Russia,” he said. “Right now the USDA expects Russia to have a 53-million-tonne crop, and they think it will have 10 million tonnes extra to export versus 4 million tonnes last year.” But there’s a great potential for extreme volatility within the individual wheat classes due to the lost spring

wheat acres in Canada and the northern U.S. because of an overabundance of moisture, drought in parts of the hard red winter wheat growing section of the southern plains and disastrous planting and growing conditions in the primary durum wheat growing areas in Europe and Canada. “I don’t think I’ve ever seen the byclass wheat situation as volatile as it is now,” Freed said. “You have to have coverage, particularly in spring wheat and hard red winter wheat.” He said durum was particularly problematic. Prices in June were at $14.50 per bushel and will, in all likelihood, move higher over the next several months, he said. “At best, we’re looking at a 70-million-bushel crop,” he said. “Last year it was closer to 100 million bushels.” As is the case with most other grains and oilseeds, wheat appears to have moved into a higher price range plateau. Over the last ﬁve years, the lower end of the wheat price range has moved higher and prices have spent more time in the $7 to $9 dollar range in the Chicago futures market, Freed said. He said with wheat acreage likely to continue its decline, particularly in the U.S., and the prospects of gaining

Bill Lapp of Advanced Economic Solutions talks about the global economy and grain markets.

signiﬁcant yield improvement through biotech developments still years away, it doesn’t appear that wheat will get a supply-side boost anytime soon. Couple that with the steady growth in demand that is expected and it’s difﬁcult to envision a signiﬁcant slide in the price of wheat over the next few years.
We want to hear from you — Send comments and inquiries to worldgrain@sosland.com. For reprints of WG articles, e-mail reprints@sosland.com.

For more information, see Page 90.

July 2011 / World Grain / www.World-Grain.com

http://www.World-Grain.com

World Grain - July 2011

Table of Contents for the Digital Edition of World Grain - July 2011